Economy

US Dollar Index and US Treasury Yields Are Stable

US Dollar Index and US Treasury Yields Are Stableā€

US long-dated Treasury yields rose for a third straight session as tepid demand for benchmark 10-year notes pressured overall bond prices.

The Treasury's $20 billion sale of 10-year notes showed weak demand from investors despite being sold off sharply going into the auction. The two-year yield settled near 1.335% after a run at a 1.359% high, a 1.31% low and 1.319% close. Participants noted the August sale was a touch better-than-average, although rates were running at 2.818% versus 2.772%. Indirect bidders, which include foreign central banks, took 55.3 percent, below the 57.9 percent last month.

The yield on the benchmark 10-year Treasury jumped almost 3-1/2 basis points to 2.16 percent, the super-long 30-year bond yields climbed 2-1/2 basis points to 2.76 percent and the yield on short-term 2-year note traded almost 1 basis point higher at 1.33 percent by 10:50GMT.

The 10-year note auction's lukewarm result was expected, analysts said, given how much rates have declined in the past week.

The curve trade was mixed with the two- and 10-year yield gap steepened to 83.5, the widest since August 24 on a closing basis, from 80.8 Monday.

The Treasury will next sell $12 billion in 30-year bonds on Wednesday.

Meanwhile, the S&P 500 Futures traded 0.15 percent higher at 2,489.50 by 10:55GMT, while at 10:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 35.87 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend).

"We had North Korea, the hurricanes, natural disasters, and issues on the debt ceiling".

The ten-year Treasury yield was trading at 2.152-a gain of ~1.3%. The 10-year yield settled near 2.17% versus a 2.175% high, 2.1244% low and 2.125% close. The five- and 30-year yield spread flattened to 102.2 from 103.7.

"Dollar/yen shows the highest correlation to US yields and the pair is benefiting from the latest rise in yields", said Yukio Ishizuki, senior currency strategist at Daiwa Securities.



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